Gold ticked higher in Asia and early London trade Friday, heading towards the weekend at $1140 an ounce – some 3.4% below the record weekly finish of a fortnight ago – as world stock markets crept towards new 14-month highs.
The "safe haven" Dollar and Yen both eased back on the currency markets, but the British Pound failed to benefit, taking the Gold Price in Sterling back up to £700 an ounce.
By lunchtime in Frankfurt, Gold priced in Euros had recovered one-fifth of the last seven days' 6.5% loss from the intra-day peak above €812 an ounce.
Short-term, "Only a close back above former channel top at $1151 will remove the downside bias," says one bullion bank analysis today.
"After seeing large scale liquidation on consecutive Fridays we could still be in for some excitement today," says another.
But "the dip-buying we've been seeing will likely continue until the end of the year, reckons Steven Zhu at the Tonglian Futures Co. in Shanghai, speaking to Bloomberg.
"Investment demand for Gold should recover after profit-taking and book-squaring dries up," agrees VTB Capital analyst Andrey Kryuchenkov, predicting a re-test of $1200 at the start of 2010.
Crude oil rallied today above $71 per barrel after Chinese trade data showed the fastest jump in energy imports since 2004, with refinery output rising by more than one-fifth.
China's export sales cut their year-on-year decline to 1.2%. Price inflation returned for the first time in nine month, adding 0.6%.
Government bonds meantime extended Thursday's sharp drop, with the yield offered by 10-year US Treasuries rising to a one-month high as prices slipped.
Ukraine's government appealed to the International Monetary Fund for $2 billion in emergency funds amid "an extremely difficult situation" with its finances.
"I don't think [Gold] is really in a bubble right now," says Michael Widmer, metals strategist for Bank of America-Merrill Lynch.
"If you look at what drove some of the buying, we do still see a lot of reserve diversification from central banks [which] by definition means they're not necessarily buying into gold markets because they expect huge price rises.
"They Buy Gold because it's good diversification."
"When you say it's a bubble...nobody owns gold yet," said commodities' fund manager Jim Rogers to CNBC Maria Bartiromo late Thursday, citing a straw poll of 300 money managers at a recent speech he made in Prague.
Some 76% said they had never owned gold, Rogers said.
Currently backing a short-term bounce in the US Dollar – simply because "Everyone is so pessimistic, including me!" – Rogers said that "Paper money throughout the world is being printed right now...
"We may have to wind up with all of our money in commodities because there's no paper money that we can trust."
Today the FistfulOfEuros blog notes that the 2009 government deficits of both Spain and Greece – put on "negative watch" and downgraded respectively by the ratings agencies this week – have been funded with European Central Bank cash initially lent to their commercial banks amid last year's financial crisis.
"The UK and the US are classified as 'resilient' rather than 'resistant'," said the Moody's rating agency in a statement, commenting on the threat to triple-A status. Moody's classes resilience below resistance, noting today that "the rise in [UK and US] debt and higher interest costs could test the ratings...but not right away."
London's Institute for Fiscal Studies (IFS) said on Thursday that UK state debt will persist at 80% of annual GDP for "at least" the next 30 years if pension obligations aren't reduced or funded.
The unfunded liability for UK public-sector and statutory pensions now totals more than £2.2 trillion ($3.5bn) according to data from the Office for National Statistics and Government Actuary Department – more than twice the outstanding government debt.
Forecasting gold will reach "a couple of thousand dollars an ounce" within the next decade, "That's not a very radical assumption," Jim Rogers told CNBC yesterday. "It's only five or six per cent a year from here."
Gold Prices have averaged 16% annual gains vs. the Dollar since 2000.
"The idea that paper currency is a poor store of value is just beginning to build up a head of steam among top investment thinkers and has not filtered down into public behavior," writes John Hathaway of Tocqueville Asset Management, the $7.6 billion New York fund.
"Warnings of a bubble in gold are coming from the same quarters that failed to spot the...financial excesses of internet [stocks], housing, leverage [and] hedge funds. We welcome the skepticism."
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